Startup companies considering offering customers software-as-a-service but that lack hosting expertise can turn to a new incubator program, SaaS Incubator, launched by OpSource this week. The company is offering it as an opportunity for organizations to jump into the hosted space with a free, six-month test run. The program is designed to help companies in the initial months of product readiness build a solid customer base in preparation for launching software. While in the incubator early-stage ISVs can immediately begin delivering beta versions of their on-demand solutions to end-users on a stable and secure platform, while courting potential investors for the next growth phase, according to the company.
"SaaS is clearly the wave of the future in software delivery. Every software company, especially in the CRM space, is realizing companies are adapting these models. But for most startups, the cost of building the necessary infrastructure for SaaS is too prohibitive," OpSource CEO Treb Ryan says. "[The Incubator is] like Saleforce's five users for free. Come in and see how it works. By removing the financial hurdles and enabling software companies to prove the benefits of SaaS in a secure, risk-free environment, we are anticipating a sea change in the software industry that is nothing short of revolutionary."
Businesses must have annual revenues less than $1 million, an SaaS application in beta, and a controlled customer base to qualify for the program. The application must run on either Windows Server 2003 or Red Hat Enterprise Linux. At the end of the incubator period OpSource will work with participants to ease the transition to its Optimal On-Demand, a scalable SaaS delivery solution that features managed services, application management, and a 24-7 call center under the ISV's brand. Currently, about 40 customers are using the service, about one third of which are traditional vendors like KANA, adding SaaS as a new way to market their products, according to Ryan. The others are startups.
Liz Herbert, analyst at Forrester Research, notes the advantages of working with OpSource. "While giants like IBM and SaaS specialists like Salesforce.com have built their own on-demand infrastructures, this isn't practical for smaller ISVs that don't have the time, resources, or skills to build and manage a secure, high availability, reliable data center. Traditional ISVs starting to offer hosted options [and] preferring to create an on-demand equivalent of the applications they license today face several challenges, including creating SaaS-friendly code, developing large scalable and secure data centers, and ramping up support staff."

OpSource allows companies to focus on what they are good at--writing software--instead of looking to hone new skills, Ryan says. "The core value proposition for the software company has changed. Salesforce and RightNow had to be good at both and it's very difficult. It allows them the focus on core competencies instead of having to be good at another whole set of objectives. In the end, it's not in the DNA. SaaS is going to be how companies buy software moving forward and we have to adapt to that."
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